So Far, Retirement Crisis is a "No-Show": Andrew Biggs
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In This Issue
General Items So Far, Retirement Crisis is a "No-Show": Andrew Biggs Opinion: "For decades, Americans have been told we are terrible retirement savers. We aren't offered a 401k; if offered, we don't participate; if we do, we don't save enough. But these warnings of an imminent retirement crisis have now been around for so long that we can check whether their dire predictions have come true. So far, the retirement crisis has been a no-show." Source: 401kspecialistmag.com Fiduciary and Plan Governance Is the Crypto Winter Finally Starting to Thaw? Several weeks after the DOL released their informal guidance on cryptocurrency, Fidelity announced that it will begin allowing 401k participants to invest up to 20% of their savings into bitcoin by year-end. Fidelity's decision to plunge into these choppy waters reflects the bullish excitement and potential of many investors who are eager to participate in this emerging opportunity. These and other recent developments in the financial services industry may be a sign that the crypto winter is experiencing the first signs of a major thaw. Source: Icemiller.com How Employers Can Transition to a New 401k Service Provider Moving your 401k plan between providers can seem daunting. This article breaks down the services you might be switching and explains how you can prepare for the transition of each one. Source: Benefitnews.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers Investment Advisers: The Independent Duties of Care and Loyalty Recent SEC guidance has clarified that the investment adviser's duties of care and loyalty are separate, independent duties. A reasonable interpretation of the SEC and Staff guidance is that the satisfaction of one will not satisfy the other, both must be individually satisfied. As a result, the SEC appears to be saying that, even if a conflict is disclosed, that does not, in and of itself, satisfy the duty of care. For example, if an adviser discloses that the adviser will receive compensation related to an investment decision or recommendation, e.g., revenue sharing, but the revenue sharing share class of a mutual fund is more expensive for the investor, the duty of care may be violated even though the duty of loyalty was satisfied. Source: Fredreish.com What Plan Sponsors Should Expect From a Retirement Plan Adviser Many plan sponsors are evaluating their relationships with plan advisers as they look for more guidance on managing their benefits, according to retirement industry veterans. As plan sponsors look to their advisers for help, many are beginning to see the difference, and it can become an issue when the adviser fails to deliver for their client. Source: Planadviser.com 403b Plans Who Are the Top 403b Providers in 2022? As a small nonprofit, there are just some things that you struggle to find the time, resources, or staff to do. Looking for a 403b provider is one of those things. As a result, many nonprofits just default to one of the larger providers. Here is a comparison chart of the larger providers. Source: Forusall.com »» Click here for More 403b Material Court and Legal Business Owners Owe $2M+ in DOL Fiduciary Breach Case Investing your company's retirement plan funds heavily in another company you have significant ties to is a no-no for a plan fiduciary. The fiduciaries of an international design firm in Moorestown, N.J. must pay more than $2 million to restore mismanaged assets to the company's retirement plan and in penalties after the DOL agreed to a settlement last Friday following an investigation and litigation. Source: 401kspecialistmag.com Retirement plan sponsors are fake fiduciaries if they offer cheap, highly rated funds from premium brands in 401k plans without factoring in fund performance, according to a fresh wave of ERISA class action cases. Most of the 11 outstanding class actions allege that plan sponsors chose BlackRock LifePath target-date funds as their default 401k option simply because they had the superficial markings of a fiduciary process rather than engaging in an authentic one. Source: Riabiz.com Seventh Circuit Helps Clarify New Pleading Standards for 401k Fee Cases A recent US Court of Appeals for the Seventh Circuit case supplies answers to many questions left open in 401k fee litigation cases after the US Supreme Court's ruling earlier this year in Hughes v. Northwestern University. Specifically, to survive a motion to dismiss in the Seventh Circuit, the recent ruling in Albert v. Oshkosh Corp. reiterated that plaintiffs must allege both high fees and substandard services or performance in comparison to other similar 401k plans. Source: Mwe.com Wells Fargo Facing Class Action Over 401k Stock Purchases The San Francisco-based bank thought it was in the clear when it agreed to pay $145 million earlier this month to resolve charges that it overpaid for company stock in its employees' retirement plan. Unfortunately for Wells Fargo, three of those plan participants are launching a class-action suit against it, opening the door for even more cases. Source: Investmentnews.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC New Bill Wants Alternative Investments in 401ks On Thursday, Senators Pat Toomey, Tim Scott, and Rep. Peter Meijer introduced the Retirement Savings Modernization Act. The act purports to "bolster Americans' retirement savings by allowing workers in defined contribution plans, like 401ks, to better diversify their portfolios and invest in higher returning asset classes." Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Retirement Plan Documentation Mitigates Operational Risk Retirement plans face risk every day from many sources. One of the most overlooked is operational risk, often due to inconsistent employee performance and turnover. Employee turnover among a plan sponsor's benefits staff can lead to a loss of valuable knowledge and experience, as well as operational failures and possible litigation. Unfortunately, plan sponsors often learn this the hard way. The Great Resignation was a wake-up call to many employers. They realized that the knowledge employees took with them will take years to replace. Source: Segalco.com Year-End Amendments Extended: CARES and 2020 Relief Act Following up on the SECURE Act and other recent plan amendment extensions in Notice 2022-33, the IRS has issued Notice 2022-45 (Sept. 27, 2022) to extend the amendment deadlines for the remaining provisions of the CARES Act, as well as for relief provided under the Taxpayer Certainty and Disaster Tax Relief Act of 2020, generally until December 31, 2025. Source: Groom.com The Headache of 401k Plan Notices Being a 401k plan sponsor isn't easy and one of the biggest headaches is dealing with notices and required documents. One area that most plan sponsors fail to fulfill their duties is the dissemination of required notices and documents, especially to former employees who still have a participant account balance in their plan. Source: Jdsupra.com Do's and Don'ts of Hardship Distributions Given the current economic climate, a greater number of participants may be requesting hardship distributions from their retirement plans. To avoid jeopardizing the qualified status of the plan, employers and plan administrators must follow both the plan document and legal requirements before making hardship distributions. Some retirement plans, such as 401k and 403b plans, may allow participants to withdraw from their retirement accounts because of a financial hardship, but these withdrawals must follow IRS guidelines. Source: Irs.gov Limited Plan Audits Are History: What 401k Plan Sponsors Should Know Two types of 401k plan audits exist, limited and full-scope audits. In a limited scope audit, an independent auditor does not have to audit any plan asset information if a bank, an insurance company, or a regulated trust company holds the 401k plan's assets. Limited scope audits are changing and plan sponsors should understand how these changes impact their 401k plans. Source: Sequoia.com »» Click here for more Compliance and Regulatory Material Marketplace News Senate Confirms Lisa Gomez as EBSA Leader Announcing the 2023 NAPA Top Young Retirement Plan Advisor Nominees
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